Can Company Voluntary Arrangements Save the High Street?

Many insolvent companies have turned to a company voluntary arrangement (CVA) as a means of repaying their debts and restructuring the business for future growth. This gives them the chance to adapt their business model to the changing times.  With so many retail businesses struggling in recent years can company voluntary arrangements save the high street?

Key Aspects of a CVA

1. Quickly improves cash flow.
2. One single, monthly repayment to all creditors via an insolvency practitioner (IP).
3. Assures creditors a reasonable proportion of the debt is repaid.
4. Cheaper to administer than other insolvency solutions (unless challenged).
5. Directors can stay in post and retain control.
6. Can reduce rent or lease repayments to manageable levels.

The Impact of CVAs on the High Street

A CVA allows a company to continue trading whilst paying off debts in a structured and manageable way. It also gives the directors breathing space to restructure the business for future profitability and growth.

There are still opportunities on the high street for companies with the right business model, so is a company voluntary arrangement the future of the high street? CVAs help to maintain a busy and appealing high street where consumers are happy to spend money. It also allows them to take advantage of the trend for hybrid shopping which shows no sign of decreasing.

Hybrid Shopping (Click and Collect)

In 2022, Barclays Corporate Banking stated that click-and-collect accounted for 40% of sales for all businesses where this is available – a rise of 37% from the previous year. This trend is still on the rise today – for example, 50% of John Lewis’s online purchases are collected in store.

Consumer Confidence

A busy and vibrant high street is much more appealing than empty shopfronts. Customers are far more likely to be tempted back for a spot of spending.

How Has the High Street Utilised CVAs?

Streamlines Operations, Keeps Staff in Work and Reduces Costs

A CVA allows a company to streamline operations to reduce costs and improve efficiency. This may mean store closures and redundancies in some areas. However, focus can then shift to the most profitable premises, which keeps the rest of the staff employed.

Rent Reduction

Landlords are often one of the biggest creditors; CVA negotiations can be a way of reducing rent or revising lease agreements to achieve more manageable repayments. This reduction of fixed costs frees up funds for use elsewhere.

Maintains the Supply Chain

By repaying suppliers regularly, the supply chain is maintained, and the smooth running of the operation isn’t compromised.

A Brighter Future with Irwin Insolvency

The impact of a company voluntary arrangement on the high street is clear. It allows a company to restructure debt, continue trading and take advantage of current trends.

Your success depends on a viable and comprehensive business plan. Our expert insolvency practitioners will guide you through the whole process.

Contact Irwin Insolvency today.